Full Tilt Poker A Ponzi Scheme?

Wednesday, September 21st, 2011 by Ryan

Things just got quite a bit worse for one of the largest online poker sites before Black Friday. The United States Attorney for the Southern District of New York, Preet Bahrara, announced that a motion has been filed to amend the civil money laundering complaint against the three online poker sites, Full Tilt, PokerStars, and Absolute Poker. This also adds three Full Tilt Poker players, with big names like Howard Lederer, Chris Ferguson, and Rafe Furst included; and says that they worked with Ray Bitar and other owners to take money from the deposits that their players made onto Full Tilt Poker, and essentially took it for themselves.

Basically what happened here, was that Full Tilt Poker was not an actual poker company, but instead they were a Ponzi scheme. Full Tilt took money from their own players (estimated hundreds of millions of dollars), and the big names listed above apparently pocketed the funds. The idea behind online poker rooms is that they keep the players' funds separate from the actual operating funds, and the money which is put aside from deposits is then used to give to players once they withdraw. Bahrara is saying that Full Tilt completely ignored this, and paid out nearly $500 million to owners and players like Lederer, Fergusion, and Furst.

The totals that were put together by the US Attorney's Office states that board members and owners were paid out around $443,860,529.89. It's a pretty exact number to be narrowed down to, and it was even narrowed down to exactly how much the four biggest names involved were paid out as well. Bitar and Lederer are said to have led the way, with Bitar given around $41 million, and Lederer given $42 million. Ferguson was projected to have received at least $25 million, with over $62 million still owed to him apparently. Last but not least, is Furst, who is said to have received $11.7 million. The remainder of the money was split between 19 other owners, and it all equals up to the $443,860,530, and one huge mess.

And while it seems that this couldn't get much worse for Full Tilt, it actually does. In 2010, Full Tilt could not find payment processors between the players' bank accounts and the poker site. So when a player would make a deposit onto the site, Full Tilt would then credit its account with the money, even though they couldn't actually collect the funds. This essentially made it so that players were playing with money that wasn't actually there, and in the end it totaled up to be around $130 million that was being played with, but wasn't actually in any account. While the site took a huge hit on Black Friday, they apparently decided to continue this scheme without the US players. After Black Friday, Full Tilt owed players all around the world over $300 million, which they could come nowhere close to covering. According to the amended complaint, Howard Lederer actually told the other higher ups at Full Tilt, that the company had a total of around $6 million of that $300 million that was owed.

At this point, there is not really a good way to look at it from Full Tilt's end. Only time will tell what will happen to Bitar and the other owners of the site, but if everything stated is true; it spells trouble for Lederer, Ferguson, Furst, and anyone else involved.